Why the air conditioning industry is key to solving the world’s rising temperatures

Disclaimer: Article published by the World Economic Forum. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the views and positions of the coolingEU forum.

Our Earth is becoming warmer with each passing year. The Intergovernmental Panel on Climate Change’s (IPCC’s) latest report alerts that surface temperatures are likely to rise by 1.5°C by the year 2050. Global warming could put about 75 percent of the world’s population at risk of potentially deadly heat exposure for more than 20 days per year by 2100, and negatively impact living conditions for many in hot and humid areas. The need for cooling is fast becoming a necessity for well-being and productivity and, in extreme cases, for survival. As temperatures increase, so does our dependence on air conditioners for thermal comfort, and the resulting emissions from these energy-intensive units, which use potent greenhouse gases as refrigerants, causes further warming, creating a vicious cycle.

Recognizing the urgent need for efficient cooling without warming the planet, Rocky Mountain Institute released its latest report, Solving the Global Cooling Challenge: How to Counter the Climate Threat from Room Air Conditioners, at the Global Cooling Innovation Summit in New Delhi, India, today. The Global Cooling Prize—an innovation challenge intended to incentivize and reward the development of a residential cooling solution that has at least five times less climate impact—was also launched at the summit, by Dr. Harsh Vardhan, the Honorable Union Minister of Science & Technology, Earth Sciences, Environment, Forest, and Climate Change of India, and other dignitaries from around the world.

The report brings to light the need for a breakthrough cooling solution across the world—and particularly in developing countries with hot and humid climates—in order to neutralize the significant economic and environmental impacts that air-conditioning growth portends. The analysis presented in the report shows that rapid scaling and adoption of a residential cooling solution that has five times less climate impact (a 5X solution) would prevent up to 100 gigatons of CO2-equivalent emissions by 2050 and help mitigate up to 0.5°C in global warming by the end of the century.

Insights from the Report

Market failures have resulted in little incentive for the air-conditioning industry to innovate

Several market factors have contributed to the sluggish pace of innovation in the air-conditioning (AC) industry, with the key factor being customer focus on low first cost as opposed to life-cycle cost. This has driven the AC industry to focus on economies of scale, resulting in a highly consolidated industry. The AC manufacturers pursue high volumes of sales by selling units to consumers at low prices; those units’ energy efficiencies simply meet or marginally exceed the Minimum Energy Performance Standards. The outcome is no surprise—the best-performing conventional, vapor compression-based, room air conditioners have achieved only about 14 percent of the theoretical efficiency limit, even as we’ve seen a rapid acceleration of technologies toward their theoretical maximums (e.g., LED lighting, solar panels) in adjacent industries.

The report estimates the global stock of room air conditioners (RACs) will grow from about 1.2 billion units today to 4.5 billion units by 2050, with developing countries accounting for about a fivefold increase over their present stock. RMI’s analysis suggests that under a business-as-usual scenario (the report’s Reference Scenario [RS]), the projected growth of RACs will require about 2,000 gigawatts of new generation capacity and create a demand for about 5,400 terawatt-hours of electricity—equivalent to the combined current annual electricity consumption of the United States, Japan, and Germany. The resulting emissions, estimated to reach between 132 and 167 gigatons of carbon dioxide equivalents (CO2e) by 2050 cumulatively, would result in a more than 0.5°C increase in global temperature by the year 2100.